International Economics

Abstract

Faced with enormous unemployment, the South African government enacted pro-SMME
policies. It was assumed that such policies would ignite broad-based growth within the SMMEs cluster,
regardless of the sector. However, the current evidence suggests that these laudable efforts have not
benefited the poorest of the poor nor have they aroused and sustained entrepreneurship in certain
quarters. Using the spaza shop as the focus and two prominent townships as the locus, this paper sought
to understand the factors that under mind the effective startup of businesses by natives. Furthermore, it
identified the support structures that can foster and sustain new firm births. Leaning on the exploratory
and descriptive research design, the quantitative research approach was enforced through selfadministered
questionnaires. The data collected was captured and analysed using the Statistical Package
for the Social Sciences (SPSS) software, and was based on 121 fully completed questionnaires. A
number of challenges unique to native spaza shops were conceded. These included a restricted access
to seed capital, inability to benefit from bulk purchases, competition from non-South African shops,
lack of business information, unsuitable business location, and the lack of collateral. The customarily
challenges included a high level of crime, high cost of security and limited management skills. To
encourage and sustain, new firm births, firstly, spaza shop-owners must have a clear vision of what they
want to achieve before they embark on the venture. Secondly, crime must be dealt with collectively.
Thirdly, government agencies and the private sector must come on board to address the skills gap.
Lastly, technology should be adopted, to mitigate the issues around bulk purchases and transport costs.